From The Law Offices of Brian A. Raphan, P.C.

Month: July 2016

A New York trial court determines that an incapacitated woman was unduly influenced by her agent under a power of attorney, noting that the testimony of an attorney who drafted a will for the woman on behalf of the agent did not carry much weight because the attorney spent insufficient time with the woman and failed to determine her knowledge of her estate.Matter of Mitchell (N.Y. Sup. Ct., No. 100163/14, June 3, 2016).

Mary Mitchell appointed Gary Shadoian as her attorney-in-fact under a power of attorney. During the time he was her agent, she wrote him checks valued at more than $120,000, which he used to buy things for himself. Mr. Shadoian contacted an attorney on Ms. Mitchell’s behalf to draft a will. The attorney had one conversation with Ms. Mitchell over the phone and met her once in person. The attorney allowed Mr. Shadoian to be present when Ms. Mitchell executed her will even though Mr. Shadoian was a beneficiary of the will.

After Ms. Mitchell was repeatedly hospitalized for neglect, the court appointed guardians for her. The guardians filed suit against Mr. Shadoian, arguing that he unduly influenced Ms. Mitchell. At the trial, the attorney who drafted the will for Ms. Mitchell testified on behalf of Ms. Shadoian that he didn’t know Ms. Mitchell was incapacitated, but admitted that he didn’t make inquiries about her knowledge of her estate.

The New York Supreme Court rules that Mr. Shadoian exercised undue influence over Ms. Mitchell. The court determines Mr. Shadoian’s testimony was not credible, and that the testimony of the attorney that prepared Ms. Mitchell’s will “was too threadbare to carry much weight.” The court notes that the attorney “failed to make even elementary inquiries as to the actual size of [Ms. Mitchell’s] estate, her medical condition, her social and familial history. Contrary to usual practice, he allowed an unrelated person, designated as beneficiary, to orchestrate the completion and execution of the will.”

by Liz Weston / NerdWallet

There’s a reason why investment companies want you to think you’ll live that long.

First, you were supposed to die at 85. Then 90. Now 95 and even 100 are common defaults when financial planners tell people how much to save for retirement.

Except that’s nuts.

In the U.S., the typical man at age 65 is expected to live another 18 years. The typical woman, about 20. Yet many financial planners contend we should save as if we’re all going to be centenarians.

“Even when you have a 350-pound guy who smokes?” asks Carolyn McClanahan, a physician and financial advisor at Life Planning Partners in Jacksonville, Florida, who’s downright offended by the notion that good financial planning requires such an obvious lie. Advances in medical science “aren’t happening that fast.”

McClanahan watched lives change in seconds during her stints in emergency rooms and pathology labs. “You come into the emergency room and you die, or I’m telling you that you have cancer,” McClanahan says. “That makes it really hard for me to tell people to save, save, save.”

Investment companies want as much of our money as possible, so it makes sense for them to promote the idea that all or even most of us should aim for triple-digit ages and save accordingly. Plus, financial advisors don’t want to get sued, either by their elderly clients or the children who have to take them in when the old folks run out of cash.

Some retirement saving is essential. Obviously. But saving for a retirement that ends at age 100 means you’ll need a nest egg that’s about 40% larger than what you’d need for a normal life expectancy.

If a 35-year-old wanted to replace 60% of her current $60,000 salary at age 65, she would need about $1.2 million at retirement age if she expects to live to 85. Stretch that to 100, and she’ll need about $1.7 million. (These figures assume 3% average annual inflation and a 7% return on investments. Your mileage may vary.)

Currently most workers (54%) have less than $25,000 saved for retirement, according to the latest survey by the Employee Benefit Research Institute.

What’s the harm?

Encouraging people to save too much can have consequences:

You might not start because you’re discouraged by the vast amounts you supposedly need.
You could put off retirement too long, working when you could have been playing or relishing your good health, which doesn’t last forever.
Once retired, you might stint on the fun stuff because you’re so worried about running short.
“I definitely have concerns that many advisors are being way too conservative,” says Michael Kitces, a certified financial planner and partner at Pinnacle Advisory Group in Columbia, Maryland.

Kitces points out that while there’s a 70% chance that at least one member of a married couple will make it to 85, the odds are only 20% either partner will make it to 95, and even lower that anyone will see 100.

“Most of our improvements in life expectancy are coming from the decline in child mortality,” Kitces says. “The actual survival rate of people in their 80s and 90s is not increasing very fast.”

Some of us will make it to 100, but that doesn’t mean everybody faces the same odds. If you’re a fit, healthy college graduate with an above-average income, a 100-year life span may be possible. If you smoke, have high blood pressure or high blood sugar, or are overweight or obese, you’re less likely to make it to 85. Lower incomes and education levels are also associated with shorter life spans.

McClanahan plans for 100-year life spans for her clients who take good care of their health and who have plenty of money. She predicts average life spans for those with average health. If clients have health challenges or not enough money to last a typical retirement, she sends them to a life expectancy calculator, Livingto100.com. Then she and the clients discuss the results to see how they want to handle the possibility of outliving their savings. (Run the numbers on multiple scenarios for yourself with NerdWallet’s Retirement Calculator.)

Uncertainty about longevity is just one of many unknowns in financial planning, says Bob Veres, a financial planning industry consultant and publisher of the trade publication Inside Information. So-called “safe” withdrawal rates of 4% annually may actually be too conservative in most markets, Veres notes. Also, people often spend less as they age, which makes planners’ typical assumptions that spending will increase with inflation each year too conservative.

Cautious assumptions may stave off lawsuits, Veres says, but they “diminish the spending capacity of people who retire today.”

“I think only the client knows whether the inconvenience of spending less in retirement is more or less painful than the risk of cutting back drastically later in retirement if the markets don’t cooperate,” Veres said.

How to save for an uncertain future

Working longer, saving more or planning to spend less in retirement are the typical prescriptions when people aren’t saving enough. But there are a few other ways to help insulate yourself in case you guess wrong and wind up living longer than you plan for:

Put off claiming Social Security. This means a bigger benefit from an income stream that you can’t outlive. Your check will be about one-third larger if you wait until at least your full retirement age (currently 66, rising to 67 for those born in 1960 and after) instead of starting at 62. Delay until 70, and your benefit would be more than 75% higher than at 62.

Consider an annuity. You give an insurance company a chunk of money and get a stream of monthly checks that can last for life. A 65-year-old man could buy a $100,000 immediate annuity, where payments start right away, and get about $530 a month without inflation protection, or around $380 with increases tied to the Consumer Price Index, according to ImmediateAnnuities.com, an annuity marketplace. Another option is a longevity annuity, where you hand over the money but payments don’t kick in until a later age, often 85.

Investigate a reverse mortgage. You can turn your home equity into cash, but you don’t have to repay the loan until you die, sell or move out. Payments could start early in your retirement so that you don’t have to tap as much of your nest egg. Or you could set up a reverse mortgage line of credit that you would only use if markets tanked, to give your investments time to recover. Or you could keep a reverse mortgage as your last-resort option, turning to it after you’ve exhausted your other assets.

Like this:

A Health Care Proxy is someone you appoint to make health related decisions for you, in the event you can not.

Who decides that I’m not able to make my own healthcare decisions?

Your attending physician will decide whether you lack the capacity to make health care decisions. The decision is made in writing. A second doctor also must be consulted in the case of decisions to withdraw or withhold life-sustaining treatment. You will be given notice of these decisions if there is any indication that you can understand it. If you object to this decision or to a decision made by your agent, your objection or decision will prevail unless a court determines that you are unable to make health care decisions.

What if I recover the ability to make my own healthcare decisions?

Your doctor is required to decide whether you can make your own health care decisions and confirm it in writing each time your doctor plans on acting on your agent’s health care decisions. If you have recovered the ability to make your own decisions, your agent will not be able to make any more decision for your unless you again lose the abilities to make them.

How do I complete a Healthcare Proxy?

In New York State, laws set forth the requirements for completing a health care proxy. You must be at least 18 years old and have the capacity to make your own decisions at the time you complete the proxy.

You must state your name and the name of the person you want to act as your agent, and state that your want the agent to have the authority to make health care decisions for you. You also must sign and date your health care proxy in the presence of two adult witnesses who are not names as your agent and have the witnesses sign the proxy. Please note that there are special rules for the execution of a proxy by residents of psychiatric facilities.

Please note that you do not need to have a lawyer draft your health care proxy, however, you may wish to consult with a lawyer for advice about a health care proxy.

You can create a proxy that lasts for a limited period of time by including in the document the dates you want the proxy to be valid. You can also revoke your proxy if you wish and you are competent to do so.

If you have appointed your husband or wife as your agent, and then you divorce or legally separate, the appointment will be revoked unless you specify that you do not wish to revoke it. You should review your proxy periodically to be sure that it continues to reflect your wishes.

Where should I keep my Proxy?

It’s best to give a copy of your proxy to your doctor as well as to the agent named in your proxy. If you revoke your proxy, be sure to notify whomever you gave a copy of the proxy. Upon entering a hospital you may give it to an administrator in charge, as your doctor, or attending physician may not be there when you arrive.

What if I don’t want a Healthcare Proxy?

You can’t be required to execute a health care proxy as a condition of receiving health care services or insurance. Also, the lack of a health care proxy or other specific instructions does not crate any presumptions regarding your wishes about health care.

Like this:

Being the executor of an estate is not a task to take lightly. An executor is the person responsible for managing the administration of a deceased individual’s estate. Although the time and effort involved will vary with the size of the estate, even if you are the executor of a small estate you will have important duties that must be performed correctly or you may be liable to the estate or the beneficiaries.

The executor is either named in the will or if there is no will, appointed by the court. You do not have to accept the position of executor even if you are named in the will.

The average estate administration takes one year, though you won’t need to work full time on it. Following are some of the duties you may have to perform as executor:

Find documents. If there is a will, but you don’t already know where the will is or the will hasn’t already been brought to court, you may need to find it among the deceased’s belongings. If all you have is a copy of the will, you may need to get the original from the lawyer who drafted it. You will also need to get a copy of the death certificate.

Hire an attorney. You are not required to hire an attorney, but mistakes can cost you money. You may be personally liable if something goes wrong with the estate or the payment of taxes. An attorney can help you make sure all the proper steps are taken and deadlines met.

Apply for probate. If there is a will, the court will grant you letters testamentary. If there is no will, you will receive letters of administration. This will officially begin your work as the executor.

Notify interested parties. Notify the beneficiaries of the will, if there is a will, as well as any potential heirs (such as children, siblings, or parents who may or may not be named in a will). In addition, you will have to place an advertisement for potential creditors in a newspaper near where the deceased lived.

Manage the deceased’s property. You will need to prepare a list of the deceased’s assets and liabilities, and you may need to collect any property in the hands of other people. One of the executor’s jobs is to protect the property from loss, so you will need to assure the property is kept safe. You will also need to hire an appraiser to find out how much any property is worth. In addition, if the estate includes a business, you may have to make sure the business continues to run.

Pay valid claims by creditors. Once the creditors are determined, you will need to pay the deceased’s debts from the estate’s funds. The executor is not personally liable for deceased’s debts. The estate usually pays any reasonable funeral expenses first. Other debts include probate and administration fees and taxes as well as any valid claims filed by creditors.

File tax returns. You need to make sure the tax forms are filed within the time frame set under the law. Taxes will include estate taxes and income taxes.

Distribute the assets to the beneficiaries. Once the creditors’ claims are clear, the executor is responsible for making sure the beneficiaries get what they are entitled to under the will or under the law, if there is no will. You may be required to sell property in order to fulfill legacies in a will. In addition, you may have to set up any trusts required by the will.

Keep accurate records. It is very important to keep accurate records of everything you do. You will need to create a final accounting, which the beneficiaries must review before the distribution of the estate can be finalized. The accounting should include any distributions and expenses as well as any income earned by the estate since the deceased died.

File the final accounting with the court. Once the final accounting is approved by the beneficiaries and the court, the court will close the estate. File a final report with the court and close the estate.

All this can be a lot of work, but remember that the executor is entitled to compensation, subject to approval by the court. Keep in mind that the compensation is counted as income, so you will need to declare it on your income taxes.

We are proud of our reputation in helping those in need especially around a time of grief. We have provided relief and comfort for countless families while expediting the process and clarifying the ‘legalease’ for our clients. Whether it’s a probate or non-probate estate each client gets the personal attention they need to make the process less of a burden. Feel free to call us for more information or email me personally at braphan@raphanlaw.com.